Getting it Right: Superannuation and Savings in the U.S.A.

Feldstein (1996) added the present value of future Social Security benefits (SSW) to the lifecycle consumption function and found that Social Security reduced private saving in 1992 by more than half. I show that this finding is significant, with a standard error ranging from 35% to 65% of actual savings in 1992. The large reduction in savings also holds when the (rejected) restrictions implied by disposable income are relaxed. But this reduction is neither robust nor significant if the sample excludes either the 1930s or the data subsequent to the 1972 legislated changes in Social Security, or if income is GNP instead of NNP.